Commercial property reports use a handful of terms repeatedly. Understanding them helps investors judge whether rents and values are likely to strengthen or soften in a particular office market.
Key terms
- Stock: the total completed office space in a market.
- New supply (completions): space delivered during a period.
- Gross absorption: total space leased during a period.
- Net absorption: the change in occupied space — leasing minus space vacated.
- Vacancy rate: the share of stock that is unoccupied.
Reading the signals
When net absorption consistently exceeds new supply, vacancy falls and landlords gain pricing power — rents tend to rise. When supply outpaces absorption, vacancy rises and tenants gain leverage through lower rents, rent-free periods and better terms.
Look beneath the city average
City-wide figures can hide large differences between micro-markets and building grades. A modern, well-located building may stay fully leased while older stock nearby struggles. Compare like with like.
Demand drivers
- Expansion of technology, global capability centres and service companies.
- Hiring trends and workplace policies.
- Availability of talent and quality of infrastructure.
For investors
Before buying office space, check the vacancy and upcoming supply in the specific micro-market, the grade of the building and the strength of its tenants. Our guide to investing in office space explains how lease terms affect value.
Market data should always be taken from a named, dated source.
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